Departure tax backdown

The tourism and travel industry ­celebrated what the opposition estimated was a $157 million victory yesterday after the federal government backed down on indexation of the departure tax for air and ship passengers to avoid a wounding defeat in Parliament on a budget bill.

A sustained industry campaign against both a one-off rise in the passenger movement charge and introduction of indexation won backing from the Coalition, the Greens and crossbench members. While the flat increase to $55 from $47 will remain, annual increases linked to inflation have been dropped.

Australian Tourism Export Council managing director
Felicia Mariani
told The Australian Financial Review last night the government’s change of mind was “a pretty momentous occasion’’ for an industry that was beset by the high dollar and was uncertain about the effects of the ­carbon tax.

Ms Mariani said that with index­ation, the charge would have netted the government more than $600 million a year by 2015-16, from an estimated gross take of $1.04 billion a year. Of this, costs of handling passengers amounts to about $350 million a year.

“A series of increases [in the charge] over many years had passed through without us making a fuss,’’ she said. “This time, with indexation, we said enough is enough and it galvanised the industry.’’

Opposition customs spokesman
Michael Keenan
said Labor had also caved in to pressure from the Coalition. The amendment from the government to the Passenger Movement Charge Bill is similar to one Mr Keenan had foreshadowed. Removing indexation would save travellers from paying an extra $157 million over the next four years, he said.

In addition, a regional tourism stimulus fund will be set up, worth about 10 per cent of the estimated government net income. It is in addition to a previously announced $61 million to market Australian tourism and business in Asia.

The fund was a key determinant of the Greens backing the amended legislation, and could be used to develop infrastructure such as walking trails or other natural attractions, and attract more direct international flights to regional airports.

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Earlier, during question time yesterday, Treasurer
Wayne Swan
said the government was interested in getting the departure legislation passed and would discuss the matter with crossbench MPs.

Opposition Leader Tony Abbott said the backdown showed the government’s budget was “unravelling before our eyes".

“They were going to be defeated on a budget bill on the floor of the lower house," Mr Abbott told Fairfax radio.

The $74 billion-a-year industry last week ran a series of newspaper advertisements, with the Flight Centre chain prominent among backers. “I must say I haven’t seen an anti-government campaign by the tourism sector like this before," Flight Centre co-founder Graham Turner said. Tourism and Transport Forum chief executive John Lee helped lead the campaign

The government had been in discussions with Greens Deputy Leader Adam Bandt on Monday night, as the Greens sought more money fro the tourism industry through either a fund for regional tourism infrastructure or green-friendly hotels.

The government planned to increase its departure tax, known as the passenger movement charge, to $55 from $47 from July 1 and enable automatic increases based on inflation. It was intended to help raise a net $610 million over four years, of which $61 million would go to the fund promoting Australian tourism and business opportunities in Asia.

Opposition shadow treasurer
Joe Hockey
said yesterday the Labor government had been forced into an ‘‘embarrassing backdown’’ because it had faced defeat on the floor of the house on a budget-related measure.

“It is now up to the government to explain the ramifications of this amendment, and its impact on Wayne Swan’s wafer thin $1.5 billion surplus,’’ Mr Hockey said.